Skip to main content

tv   Closing Bell With Maria Bartiromo  CNBC  December 14, 2012 4:00pm-5:00pm EST

4:00 pm
buy some u.s. companies with china exposure. buy some great dividend payers and growers and buy some companies with phenomenal balance sheets. that's what you want to do for this year. >> ben willis, you like this market here? >> i do, a perfectly normal correction. buying the dip has definitely paid off. i'm not afraid of it. i do believe that the rally is built in for the expectation that there is going to be a positive conclusion in washington. the downside is not if there is not a vote to settle it. >> thank you, guys. see you later. have a good weekend. that's the first hour of the "closing bell" with the dow down 40 point. here's the second hour now with bartiromo. hi, everybody. good afternoon. welcome to the "closing bell." i'm maria bartiromo. this market closing lower on this day of national tragedy. we'll have the late on the senseless school shooting in connecticut in just a moment for you, but, first, take a look at how we're finishing the day on wall street. declines on the market. once again worries about the fiscal cliff going into year
4:01 pm
end. the dow jones industrial average down about 33 points on the session at 13,137. volume really stopped in the middle of the day. we saw things slow down quite a bit on the heels of the awful shooting and fatalities in connecticut. the nasdaq and s&p 500 also under pressure today. the mood down here impacted by the awful events in connecticut with us is hank smith of haverford investments and maggie patel and rajai from barclays and one of baron's top ranked financial advisers for the year. congratulations on that. sandy, nice numbers. okay. let's talk about the buying opportunities and how allocate capital in the midst of all of thighs issues that we talk about so much, in particular the fiscal cliff. >> well, i don't think you can trade around the fiscal cliff. if you have cash and plenty of people have cash on the sidelines and you do get that sharp selloff because congress
4:02 pm
cannot avert the fiscal cliff and we fall over in the new year, take advantage of it and get into the market because it will be a terrific buying opportunity. >> should i be waiting though for the buying opportunity? in other words, we know capital gains taxes will be higher next year. should i be trying to get out of my winners and look for a market selloff to get back in? >> well, look, if you haven't taken gains this year, you should take more than you're normally accustomed to. i think that's a no-brainer, and if you want to -- if you want to wait for that buying opportunity, you're taking risk because if congress and the white house can get that settlement you're looking at a much higher market from here. >> okay. >> but, again, selloffs should not be a time to panic. it should be a time to commit capital, a great buying opportunity. >> that's what you're doing, hank? >> absolutely. >> how likely will we have a significant market correction because of worries about the financial cliff? do you think we'll be able to get into stocks in better prices? >> if we do, but some analysts
4:03 pm
are calling for a 10% correction if it seems like we're go over and stay over for a while before getting legislation. i agree with hank. that's the point to buy. the end of the year target from equity analysts, means a share of 1,500 for the s&p and as long as the u.s. remains a 2% economy and as long as rates remain for long which you believe they will, u.s. equities are poised to continue to do well. >> and in terms of this fiscal cliff, what kind of a hiccup might that represent? >> it depends on how long it continues, right? if you're sitting here in february of this year with retroactive legislation not being passed, people's houses have gone up and have gone up for a while, then you're looking at the significance of an economic confluence. if we do not go over we'll expect a near-term resolution at least, a week or two weeks after we go over, that's the hope certainly. >> right, and the markets will probably push their hands, by the way.
4:04 pm
>> you would imagine so. >> two weeks into january. >> sandy, you've got to be responsible for wealth planning long term. what are you telling your clients as we loom the near fiscal cliff deadline? >> it's really hard, maria, to predict with any certainty what will happen, and we're focused on the longer term. we deal with clients who have very long investment time horizons and we really like placing equities around the world. we lost plays in muney bonds now. we think there's great opportunities there so we're focusing on the opportunities that we see as opposed to thinking about jumping ship because we're definitely not going to do that. >> what about what hank said, it's a no-brainer if you haven't taken gains and sitting on gains you want to do that by year end given the change in tax law for capital gains? >> absolutely. that's one certain thing. we know tax rates are low in 2012 on a historical basis. we think they are only going higher, and the we've been engaged in a lot of
4:05 pm
conversations. and converting roth conversions is where you convert income in 2012. >> i see, i see. margie, you're expecting a pretty good 2013, even if there's expectations that if we go over the cliff there will be a recession. what's behind your optimism? >> i think the equity market will do better than risk-free trading, and what i'm worried about is, one, corporations have slammed on the brakes as far as spending and hiring, and that looks like it's going to continue, and i think we're likely to get negative surprises rather than positive surprises when congress does come to an agreement of what to do about the fiscal cliff so pretty modest. >> not such a great year in 2013, at least not the first half then. >> no, absolutely not. >> yeah. are there areas to avoid if you buy into that, hank? do you want to avoid the economically sensitive name, avoid the dividend payers given the fact that dividend taxes may go up.
4:06 pm
how do you play, and what's the strategy around all the changes? >> i think the strategy is to have a balance and have some exposure to the offensive cyclical stocks as long as we don't have a recession. these are very attractively priced. also have some defensive companies. we're not ignoring dividends. we're seeking those better than bond yields, stocks that have dividend yields better than their own ten-year debt deal and there's plenty of them in every s&p sector. we think that's an opportunity even with dividend taxation going up. >> yeah. how high does it go up, that's the question, right? what if it goes to 44%. is that a reason to avoid dividend payers? >> no, because historically dividends have always been taxed at the top marginal rate. only since '03 that there's a preferential rate and it hasn't affected the performance of dividend-paying stocks and what it does is affect the management behavior. you'll probably get a little bit less and more share buybacks. >> as opposed to dividends, that's a good point. sandy, let me ask you the
4:07 pm
sectors you like the most here. where would you be putting money to work for a long-term horizon? >> we really like spreading money around the world, maria. we think there's a lot of great opportunity in the emerging market countries. we have a middle class that's growing, becoming not only producers but consumers, and we really like that. it's creating opportunities not only in the equity space but also in real estate and private equity. >> i see, okay. in terms of the sectors, margie, from your standpoint, are there areas to avoid if in fact your scenario materializes and that is a tougher than expected economy? >> yes. i think that technology is actually going to be a little disappointing. i think it's going to become more like an industrial cyclical so there's very modest exposure there. i think really u.s. centric companies with low growth but sustainable growth are going to look a lot more attractive. we've seen high-growth companies such as apple often have big disappointments so i'm looking
4:08 pm
for slow growth that's sustainable. i think the farm is very attractive and the reit sector is very, very attractive because they can take advantage of the low interest rates. >> rv j., how are you taking advantage of the low rates and what was your take on the fed the other day? >> in the fixed income space what we actually like in taking advantage of low rates is going down the credit curve. that means the high-yield sector and corporate credit, that means the non-agency mortgage sector when it comes to the securitized side. as far as the fed the other day, we actually don't -- we are prepared to take the federal face value when we say that this doesn't materially change the timetable that they had in mind. it is just a better policy framework than putting an arbitrary date out there. now the question, maria, comes to when you come to 2014, and if the employment rate has kept falling as quickly as it has in the last year, year and a half and at 6.8%, 6.7% on the
4:09 pm
unemployment rate hypothetically, does the market then automatically start to tighten policy for the fed? does it start to anticipate higher rates, or does the fed start to bring those expectations down, saying 6.5% isn't the end of the world but that doesn't mean we're actually going. i don't know the answer it. will be interesting to watch. >> we'll be watching as well. hope you'll come back soon to watch it as well. we'll round up the big winners and losers as we creep ever so closer to the fiscal cliff. we'll catch up with courtney reagan. >> many stocks are trading sideways as wall street waits for news out of washington. seven of the ten s&p large-cap sector losing ground, consumer discretionary faring the worst, off more than a percent and many believe the fiscal discussion is impacting retail sales. retail stocks are sending a message. with 12 days left until christmas, many of the discount retailers among the biggest consumer discretionary losers this week. family dollar down more than 7%
4:10 pm
and dollar general off 6% and ross stores losing more than 4% and walmart, the world's largest retailer, the biggest loser of the dow 30 for the week. j.c. penney shares up more than 15% this week. the s&p 500's biggest weekly gainer. material, the week's biggest gainer, cliff natural resources up 14% and u.s. steel up 8.5%, but by far the biggest talker of the week is a. just two analysts today warning that iphone sales might be less than they were expecting. the stock down almost 5% for the week and dragging the nasdaq down right along with it. see that happen almost every time. thanks so much. >> courtney reagan with the latest. want to update you on the tragic school shooting in connecticut. let's get to nbc's chris polone. chris? >> reporter: yeah, maria, this is a stunned community as is much of the northeast and the country upon hearing of the awful event that happened here today in newtown, concould.
4:11 pm
police briefed the media giving the latest information, and here's what we know so far. 26 total victims, 20 of them young children. civics them were adults in the shooting that happened around 9:30 this morning. investigators say that a gunman came to the sandy hook elementary school here in newtown. he entered. he went to a classroom that nbc news has learned was taught by his mother. she was a kindergarten teacher here. it's believed that the gunman killed his mother and the children in her classroom. police say they continue to investigate. they are processing the scene right now. they are also going to court to get search warrants to execute them in various locations, of course, trying to answer the big question whenever something like this happens why? why did this happen? investigators don't even venture a guess of how long they will be processing the scene, the school which was just a short ways from here. they say they are going through it meticulously to try and figure out exactly what happened minute by minute and try to figure out exactly why this
4:12 pm
happened. >> as are we all. thank you so much. we appreciate it. we'll check in as the news developments. thank you very much. are the markets headed for a huge nosedive because of the fiscal cliff? we'll navigate the rest of the year. somebody warns that the dow could plummet several hundred points if we go over the cliff. we're cliff diving and later is best buy a good buy in the stock cratering after best buy's board gave its founder more time to pony unfinancing for his buyout bid. we'll have the very latest best buy trade. then what makes a good 401(k)? bright scope made a list of the top plans in the country. find out how your 401(k) is measuring up. back in a moment. even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors.
4:13 pm
4:14 pm
♪ ♪ [ male announcer ] while you're getting ready for the holidays,
4:15 pm
we're getting ready for you. tis the season. for food, for family, and now, something extra -- for you. welcome back. the tragedy in connecticut putting the fiscal cliff certainly on the back burner. the latest developments from washington. >> reporter: hi, maria, you're right. the tragedy in connecticut has struck a downbeat tone here in washington as well as it has across the country. the flag at the capitol building lowered to half staff, but before the news in washington broke there were a couple of developments to bring you up to speed on in terms of the fiscal cliff and the negotiations there. the group fix the debt, the non-profit group pushing for a solution here, unveiled a new ad that they are going to run nationally starting this
4:16 pm
weekend. it's $3 million ad buy, and in it they interview average americans about their views on whether washington should come to a dole or not, and, of course, you see these people advocating for a solution to the national debt issue. speaker boehner, meanwhile, has gone home to ohio for the weekend, although his aides do stress that he's available by phone for conversations with the president, if need be, over the weekend and then, of course, over at the white house earlier today, press secretary jay carney trying to strike sort of an upbeat tone, as upbeat it is a can be when negotiations do seem to be at a bit of a standstill here. take a listen to press secretary jay carney earlier today. >> the president continues to believe that a deal is possible, that not only confronts the deadlines associated with the so-called fiscal cliff but allows us to achieve something far bigger.
4:17 pm
>> but, maria, you're right. the tragedy in connecticut is really dominating everyone's attention here in washington, and we're seeing statements from all members of congress from the connecticut area as well as at the national level. that's really dominating the conversation here in town right now, maria. >> of course, as it should. thank you so much, eamon javers in washington. neither side seems closer to signing on the dotted line so is congress living on borrowed time with the markets as it drags out the process in the next couple of weeks? christopher whalen is with me and says the market will throw a tantrum if we don't get a deal and another says the markets will trade sideways to slightly lower from now until year end. >> you think the markets have actually baked in no deal? >> i think there's likely to be a deal by late december, early january, last minute and the
4:18 pm
markets are poised to rally. i think they are kind of going sideways the next few days or so. i think they are probably going to rally in the year end, early january and then i'd be worried about a downtown because i think the first quarter will be surprisingly weak in the united states. >> the first quarter will be weak. we already know about the anticipation going into the first quarter. the reason i'm stuck on this question is you think that this is baked in because i think the market is totally expecting a deal. i think the market would be much lower if they thought there was no deal coming. >> that's right. >> give me a break. >> i totally agree with you. i think eventually the house is going to accept that senate legislation that raises rates on top earners and they come back in january and redirect the narrative to cuts and that's what they haven't done a good job on. i think you and i agree it's the economy, it's earnings. there's a lot of factors that are going to take this market down where use of the fiscal cliff is a rhetorical talking point but it's the underlying
4:19 pm
fundamentals that has people worried. >> what kind of signs would we see? >> if they don't have a deal by the end of the year, the market will be flopping around, not a lot of big players in. people who made money this year will be out. so it will be a choppy, very volatile market but we get no relief because three months later we get the debt ceiling. so we won't get what we want. >> constant gridlock. you're telling me the end of the year. i don't know, harry, what do you think about that? i think if we don't get a deal next week there's no deal. >> they go home. >> that could be the week that was. what do you think about next week, hair? >> i think that's what you're likely to get it, and i think the markets -- i see the s&p going down to 1400. you get some type of deal and you get a rally and tell people to sell into that rally late december, early january. we project the s&p could go as high as 1530. less downside if there's disappointment and more upside.
4:20 pm
>> wait a second. you're saying the markets are going to go to 1400. we're at 1413. what do you mean? 13 points? >> goes sideways for another few days, down another percent and then i see more upside. earnings will continue to sell the rate. the top 2%, people raising the taxes on, they are 25% of spending. it is going to have onimpact, the tax rises, and i think the republicans will be forced into it because they don't have the hand the time they had last time. obama's got the mandate. >> oh, he doesn't have a mandate. what are you going like this? >> one of the weakest presidents we've had in a president. >> 75% of people approve of taxing the top 2% and obama won the election. that's a mandate. >> well, look, i think the republicans have misplayed this hand for a year. they could have had a much better rhetorical plan talking about cuts. >> i agree on that. >> and we let them raise taxes,
4:21 pm
applaud the president and thank you very much and we come back in january and we talk about cuts. >> we're talking a lot about politics but i'm trying to get at one specific thing. i'm not a near-term trader, i'm not a day trader, i like to look long term but i want to know what's going to happen in the next two weeks because i want to know if we'll be able to get stocks at lower prices and how sizable the selloff might be. if we don't get a deal next week. >> i think it sells off, yeah. >> how much? >> hundreds of points on the s&p at least, because this market wants to go, maria. financials, earnings not great, volumes are going to be down so i think this market is looking for an excuse to take those names lower. >> harry, what do you think? in the next two weeks we don't get a deal what, happens to this market? >> maybe down 5%. i just don't think that's the likely scenario. >> okay. >> and you've got to bet on the politics here. i don't like that, but that's the way you have to bet. >> but even if we get a deal the
4:22 pm
fourth-quarter numbers are not going to be that great. we'll shift back to fundamentals, and then you'll be able to buy your stocks lower. >> i agree. >> you get what you wish for. >> i'll be looking for a drop more in january and february than in december myself. >> and then we'll be dealing with the debt ceiling. >> these upper income people are set to slow anyway five years after homer simpson did in 2007. higher demographics. 25% of spending, you can't argue with these people. >> that's right. >> they dominate spending and are still spending when homer simpson is not so i think the impact of the deal are going to be worse. >> we've already gone after the people. >> when you say these people, are you including 2% and yourself? >> i'm going to spend less next year. >> that should be us. >> just sob clear. let me ask you about the debt ceiling dewitt because come in march we've got a whole other shario we're fighting about. >> that's right. >> what does that do to the economy, and that's the
4:23 pm
first-quarter affair? >> i think it's going to slow down an already slowing economy. we still don't have credit expansion in housing, okay. we're shrinking credit in housing. you people in this area can't get mortgages. you know, the median home price in westchester county is close to $1 million, no mortgages up there. scarsdale, just writing about this, a weak economy going into 2013 and all of the uncertainties is going to keep investors very short term in their thinking and the same thing with business executives. why do corporations have all the cash, maria? because of the fed and because of uncertainty. there's no commercial paper market now so your average treasurer keeps more cash for operations, and he's got to fund his customers. he's got to give them terms. nobody understands this at the fed. >> you're right. what about the fed, harry? were you pleased or unhappy with the fed action this week? what do we have going now, qe4? >> it's absolutely desperate that you have to keep upping the ante, and showing how weak the economy is. we're still in critical care, on
4:24 pm
life support, and we'd be in big trouble without $1 trillion in stimulus. in europe the stimulus stopped working in 2012. in 2013 the stimulus is just not going to make an impact. these more wealthy people that will be spending will be hit by more taxes and they will slow down and i think that you're going to see the economy be much worse in 2013, but, you know, we may get more stimulus first in china and europe so i think it's going to be see-saw first half of 2013 and then i think the markets will head down seriously in the second half of 2013. >> but, again, to his point, the wealthy includes savers, both corporate and individuals, grandma and grand past the fed is killing them. >> killing them. >> so if we don't reball the equation, i don't think we'll make any progress. >> very, very important insights. gentlemen, appreciate it. >> happy new year. >> let's hope it's a happy one, guys. thank you. meanwhile, dallas federal reserve president richard fisher
4:25 pm
saying congress should borrow a book from its playbook to strike a deal on the fiscal cliff. >> we get things done. we make a decision, and we proceed. >> we'll discuss whether washington gridlock will unravel all the fed's work to keep the economic recovery on track. and next up, is your 401(k) among the best or worst rated plans in the country? don't miss that one. back in a moment. any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
4:26 pm
4:27 pm
military families face, we understand. at usaa, we know military life is different. we've been there. that's why every bit of financial advice we offer is geared specifically to current and former military members and their families. [ laughs ] dad! dad! [ applause ] ♪ [ male announcer ] life brings obstacles. usaa brings advice. call or visit us online. we're ready to help. e here's the thing the
4:28 pm
committee makes a leadership under ben boerngy and it's his fed going forward and we leave the table and we're still friends. can i sell it to you? i can't sell it with passion, but i will say that this is action in a city called washington or sometimes in texas we call it washington stand, where people never get anything done or don't appear to easily get things done. we do get things done. we make a decision and we proceed. >> and the fed has gotten a lot done that. was dallas federal reserve president richard fisher saying congress and the white house need to take a page from the fed on how to work and play together. the lack of action on the fiscal cliff could damage the economy in ways that the fed cannot combat. lindsey paigsa is with me and ward mccarthy of jeffries. they both join me to weigh in. lindy, what can the fed do, do you think, if congress and the white house don't make a deal and we go over the cliff? >> you know, bernanke has been very clear if the u.s. economy does go over the fiscal cliff
4:29 pm
the fed does not have the tools to offset the impact and this is something he continued to imif a size in wednesday's press conference, looking at size. impact and looking at us to temper our expectations of what federal policy can achieve. we've always had the doves and the hawks and now we have this third growing group at the fed that's really questioning the effectiveness of monetary policy overall to get us on a long-term path of growth independent of the fiscal cliff. >> yeah. ward, as you point out, the fed has its foot to the pedal. is the fed bailing out the white house and congress? >> oh, i don't think that's the objective. i think what they are trying to do is save the citizens of this country from the white house and congress by doing as much as they can on monetary policy to try to create job growth. we lost 8.8 million jobs during the recession. we have only a little more than 5 million back. jobs, jobs, jobs. that is what the fed is trying to do, create jobs. >> but the problem is it's not a typical recovery. generally easing works.
4:30 pm
the fed brings down interest rates. all of a sudden businesses, individuals take on new loans, we see business growth. we see job growth recover quickly and all of a sudden wage pressures begin to increase. this time around easing has not translated and unemployment is 6 million short of the previous high and wage pressures are nonexistent so the fed really, it's questionable whether or not monetary policy can be effective at this point. >> it's interesting, you know, ward you're saying jobs, jobs, jobs. in january, if we go over the cliff, it's going to beoffs, layoffs, layoffs. >> that's right. that's exactly what will happen. >> i mean, how do you see things playing out from here? what happens to the economy if we go over the fiscal cliff? give us your expectation? >> well, if the economy does go off the fiscal cliff, and right now the politicians are not creating any confidence that they are going to deal with it in the right way we'll see a sharp contraction of suh gdp growth in the first quarter, 2%
4:31 pm
to 2.5% and the reaction depends on what happens in washington. a lot of things are in place right now that will force them to reach a long-term deal in 2013 and relatively early in the deal -- year, i should say, even if they can't do something to prevent us from coming off the cliff in 2012. >> what will that deal look like? mean, obviously we are looking at probably higher taxes. we've got new taxes with the obama care legislation, the health care legislation so that's going to mean a bit of a pressure for folks. what about the employment situation as a result of cutbacks that we'll see because if we do get a deal we're going to see spending cuts. >> well, if you are going to reduce our budget deficit, you have to raise more revenues and you have to cut your spending, and you can't pretend that entitlements don't exist because even if -- if you look at the cbo projections for us going off the cliff and having this sequester as it is now, we still
4:32 pm
never get the budget into balance. in fact, the best thing that happens is that revenues get to 20% of gdp and spending goats 22% of gdp and then starts rising thereforise rising thereafter. you have to address the spending or else we won't have a long-term deal. >> lindsey, what do you think of the market deal or no deal? >> if we go over the deal no doubt we fall into recession and the question is how deep. it's very likely that we shave off about 4% in the first half of the year. we could be talking about 2 million in terms of job losses, a 15% unemployment rate. we could be talking about 20% if you add in the discouraged workers, part-time workers, et cetera, so it really paints a very dismal picture and the chairman has emphasized this over and over again really calling on washington handing over the proverbial baton saying, look, we've done everything we can to foster growth and create a low interest rate environment to get businesses out there and investing and now it's up to you
4:33 pm
folks in washington not town do all the momentum we've put in place. >> thanks so much to you both. we'll keep following this important story. obviously we're all watching that year-end development. up next, news you can use. can you make your company change your 401(k) and make it better? find out how to get it done, and then is now the best time to buy best buy shares? a stock in a free fall all year this year, wiping out half its value. we'll tell you the trade. stick around. of their own futur. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪
4:34 pm
4:35 pm
4:36 pm
welcome back. are you saving enough in your company 401(k)? do you think you are? check this out. marathon oil had an average contribution, including employee and company match of $20,000 per participant this year. that helped to put them in the number one spot on the bright scope list of top-rated 401(k) plans. so we got to thinking. what makes a good 401(k) plan? joining me is brightscope co-founder mike alfred. good to have you on the program. >> great to be here, maria. >> so what does make a good 401(k) plan? talk to us about the top plans and what they have in common.
4:37 pm
>> so the best 401(k) plans typically have a very large contribution from the company so usually that expresses a match or some other sort of profit-sharing contribution and also have low fees and diversified menu. those are the factors that you usually see. >> so you point out that the top plans offer immediate vesting and planned participation. why is this so important? >> well, because if you just join a new company and you're not -- you're not able to contribute for a year or two years afterwards, obviously you won't be able to start saving for retirement, and if you have a high match and were to leave the company let's say mid-year or leave the company only a year or two after you join the company you might lose all that contribution. that actually helped me when i left an employer early on in my career and i lost a couple thousand dollars. this match was okay but it would be okay if i got to keep the money. >> okay. interesting. marathon oil offers 100% match for a 7% contribution. that sounds amazing. >> it's a great -- >> southwest and amgen also have
4:38 pm
a 100% match. >> correct. southwest i think is up to 9.3% now, and saudi arabian oil company is up to 100% to 9% so obviously if you're in those plans you've got to be saving everything you can. >> do you think that if you have as much as you can have in your 401(k), do you think it's overdoing it to buy the stock of your company because you already own the stock of your company in your 401(k). should you avoid buying any more stock in your company because that's not exactly diversifying? >> yeah, most people, most experts recommend not buying more than say 10% of your plan in the company stock. certainly if you were an apple employee over the last ten years that would have been a bad decision so there's always that idiosyncratic situation where for certain companies that will be a bad decision but i think for the average person you should be diversified. >> okay. other trends rin crease in index funds and we know those are wildly popular.
4:39 pm
you saw the average contribution for participant go up there. >> absolutely. i think index funds are training traction and showing up on more plans and more people are using them. i think there's been a long-term shift away from active management. i don't think that it will always, you know, necessarily always go that direction but at least for now it looks like index funds will pick up in plans. >> and etfs, what are some of the other popular investment vehicles there in. >> etfs, sort of. a lot of buzz but efts haven't seen a lot ever traction but collective trusts, independent products created specifically for the employee base, those are very, very popular and, of course, target date funds. almost every plan in the country has one and in a lot of cases participants are putting the majority into those funds which make sense because they reallocate along a glide path so you don't have to make
4:40 pm
investment decisions when you go along. >> how often do you want to reassess what you're doing in your 401(k)? >> most people are not checking it or taking money out, but should you be reassessing every year, every six months in terms of ensuring you're exposed to where you want to be exposed? >> so, a lot of people disagree on this person. i think personally i think once a year is probably fine assuming you either have an investment adviser supporting you in your decision making or you're using a good low-cost target date fund. some people make the mistake of trying to reallocate too frequently and trying to make too many decisions, trading in and out of the commodities fund. i think that could be detriment detrimental to your long-term wealth. >> the ceo of one of italy's companies is with us sounding the alarm and best buy back to
4:41 pm
its losing ways after surging 16% yesterday. find out if you should pick up the stock at these levels. you're watching "closing bell" on cnbc, first in business worldwide. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chas
4:42 pm as you can see, geico's customer satisfaction is at 97%. mmmm tasty. and cut! very good. people are always asking me how we make these geico adverts. so we're taking you behind the scenes. this coffee cup, for example, is computer animated. it's not real. geico's customer satisfaction is quite real though. this computer-animated coffee tastes dreadful. geico. 15 minutes could save you 15 % or more on car insurance.
4:43 pm
someone get me a latte will ya, please?
4:44 pm
welcome back, the fiscal cliff deadline in the united states is not just being watched here. the world is watching. with us now the chairman of the country's largest oil company of italy. good to have you on the program with us. >> thank you so much. >> thanks so much for joining us. let me ask you first about what's going on in the united states. yours is a global company. what are the ramifications for your company if america shoots itself in the foot, if you will, and goes over this fiscal cliff? >> you know, fiscal cliff is a situation which is very much looked at from the european side because if america goes well, the world goes well, and we hope that this solution will be found, but we're really very much used to last-minute negotiations in our parliamentary governance. maybe the u.s. is not used as much to the last minute, last night, so we're very confident that a solution will be found. >> you think we will get a solution in the 11th hour? >> absolutely. >> that's how america normally does, it i guess. let me ask you. interesting to look around the world and see austerity everywhere you look. we're looking at this subject, whether it's in the united states, in italy, throughout
4:45 pm
europe. give us your sense of what's going on with the debt situation in italy right now. news today, of course, that the public debt rose above 2 trillion euro for the first time in october. can the government get the debt under control in italy? >> you know, we started to manage our spending review last year when government took place. there was a huge parliamentary alignment around the agenda of the prime minister because the crisis effect was that there was no alternative, so everyone had to really support an agenda of tackling the control of costs and tackling the reforms that every country needs, every democracy needs. the agenda was put in place so fast that it had an effect also on the italian reputation and negotiating power versus the other european countries, and the effect of that, all the measures that the ecb took after
4:46 pm
those alignment really gave big confidence to the world markets. when draghi said the ecb is going to do anything that is necessary to avoid a euro collapse. that was really a strong message to the market. >> yeah, that really kept rates, you know, in check. that really helped rates because that was a vicious psych. the last time i was in italy there was a feeling on the ground that people were upset about the austerity. what's the feeling today? are there still very sharp cutbacks in spending affecting people and their sentiment and their spending ability? >> you know, any citizen wants, demonstration of the public thing, is a good manager, so at the beginning there was a huge consensus with multi-governments because it really gave the impression that the management of the public was the priority, and it got a lot of support. despite the heavy taxes that he had to impose on our country.
4:47 pm
so people realize that an effort needs to be done, and they are ready to take this effort in exchange of a vision, so you need to give them the purpose why they are going through this sweating and blood-spilling which is pretty harsh, and the vision is if our accounts would be in in order, the financial market will trash the system, the spreads will go down and all debt resources will be freed up to boost the economy, so the next step in the agenda is really create the growth, and that growth will be able to increase the gdp and manage this debt which just reached 2 trillion. >> that was my next question. when would you expect a growth agenda really be the priority throughout europe? do you see that in 2013, or is that a couple years away? >> i think that the governance of the parliamentary work is long. what you need in a crisis usually is long-term vision,
4:48 pm
long-term strategies and fast execution. you need an industrial plan, energy plans and fast execution to put the norms together which gives a sense that things are done. the democratic government don't reflect that because the terms of government is really five years by definition so it's shorter than an infrastructure program, and the fast execution is a wish because the parliamently works and now in 2013 italy is next. europe first. i'm also in charge of attracting foreign investments so the priority is pretty well known, freeing up bureaucracy and letting enterprises do their job
4:49 pm
and don't be really constrained by labor laws or too many laws that affect the willingness of an entrepreneur to do his job. >> find it interesting that we're dealing with the same issues, labor laws certainly in some cases have really hindered the ability for some businesses to do well. let me ask you about any and how things are going. we just saw a report recently where there was a report that said by 2020 america could actually be a great oil exporter which i found just amazing. where are you finding developments? i know that in ghana recently was a big opportunity for your company, also libya. where is the oil in the world and how is business at any? >> you know, the company is 75% about foreign business, so whatever we do, we do it mostly in africa and also in the u.s., but we're the biggest oil company in africa, and we're coming from a year of great successes. we had fantastic discovery rate
4:50 pm
and the biggest claim we can make it this huge gas base in mozambique where we discovered about 68 tcf, just to give you consumption sense, 25 years of consumption of a country like italy, so it's a huge amount which is going to really change the face of the industry, and that goes together with what happened in the united states. as you know, united states just had a huge transformation equal to internet meant this shale gas, fracking economy created such a huge change which is really changing also the dynamics of the gas business in europe. >> do you think the u.s. has that kind of potential? >> it all depends. it's a matter of laws that should be passed. but main interests of u.s. at the time were to reach energy security for their own use, and i think that is pretty much visible, and that is going to
4:51 pm
create also an effect on the general manufacturing, the insourcing of energy intensive industry is now a fact. a lot of global brands are bringing in united states, beck continuing united states, this capacity which brings jobs and helps the governments to its reforms and actions. >> i think the energy is the best opportunity for expansion. we appreciate you joining us. should you be betting big on best buy? we'll have the best buy trade coming next. stay with us. twins. i didn't see them coming.
4:52 pm
i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. governor of getting it done. you know how to dance... with a deadline. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. this is awesome.
4:53 pm
[ male announcer ] yes, it is, business pro. yes, it is. go national. go like a pro.
4:54 pm
welcome back. shares of best buy down 15% after company founder richard schultz got more time to put together a buyout offer. can we expect a deal soon and where do the traders see it going. brian thublin is here. what do you expect? you expect a deal? >> we've seen wild swings in the stock. you look at the chart over the last week, all the fast money came out of this trade expecting a deal to happen right away. once you saw the stock sell off down to the $12 level, they
4:55 pm
purchased the march 12 calls. they're expecting the stock to rise 15% or some sort of 15 to 20% premium to a deal. whether that happens or not, the reason richard schultz extended the deal, not just for the financing reason, but has control of the board from now through march. now he has a little control. black friday sales were terrible, down 5.6%. there's no reason for him to rush this thing. let's see how things pan out. put together a deal to reform this company. that's why you see the stocks sell off. the deal won't be as lucrative as you said before. buying those calls gives you defined risk. >> brian thanks so much. brian stut land. be sure to stay tuned for "options action" right after "closing bell." we're back in a moment with the latest developments on the horrific mass shooting at the connecticut elementary school. we'll go live to the scene. back in a moment. [ male announcer ] trading's like a high-speed train.
4:56 pm
and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account. every human being is unique. and there is one store that recognizes it. the sleep number store. the only place in the world you'll find the extraordinarily comfortable sleep number experience. an exclusive collection of innovations that totally individualize your sleep. perfectly comfortable pillows that adjust to your size and shape. temperature-balancing bedding. dual warmth comforters. all designed around the sleep number bed: a bed with dual-air technology that allows you to adjust
4:57 pm
to the support your body needs. each of your bodies. in the name of human individuality: the sleep number collection. discover how our sleep professionals can individualize your sleep experience. exclusively at one of our 400 sleep number stores nationwide. sleep number. comfort individualized. this holiday season, give the gift that's magical: the innovative airfit adjustable pillow at special 30% savings.
4:58 pm
welcome back. we want to update you now on the tragic school shooting in connecticut. let's get to nbc's chris pallone. he has the latest on the
4:59 pm
senseless violent. >> reporter: we're getting another update from connecticut state police to my right here about this tragedy. as you mentioned, the investigation continues at this hour. the school is still an active crime scene as they try to figure out what happened here today and why it happened. they're appearing several search warrants to go into various places related to the gunman to try to figure out why he carried out this attack this morning. remember, the number of victims in this, 26, 20 young children, many of them kindergarteners and six adults as the school. we've been told there's a related crime scene in newtown where another adult has been found dead. the connection we're not sure of at this point. police expect to be in the school for quite some time to try to figure out exactly what happened. >> thanks very much. it's just an unbelievable story. do we know -- we h
disc Borrow a DVD of this show
info Stream Only
Uploaded by
TV Archive
on 12/14/2012